Market and Environmental Orientation, Characteristics of
Entrepreneurs, Broadscope Information on Performance of Smes
in Palembang
Fetty Maretha¹, Sepriansyah Ahmad Ari Gunawan²
¹ Department of Business Administration, State Polytechnic of Sriwijaya,Palembang, Indonesia
² Departnent of Informatics Management Major, State Polytechnic of Sriwijaya Palembang, Indonesia
Keywords: Market Orientation, Environmental Orientation, Entrepreneurs, Broadscope Information
Abstract: The purpose of this study was to determine the influence of market orientation, environmental orientation,
characteristics of individual entrepreneurs and broadscope information on the performance of SMEs in
Palembang city through entrepreneurship orientation as mediated variable for SMEs that had only been
established for three years. The population in this study were SMEs located in Palembang which were
registered on the Ministry of Cooperatives and SMEs which had only been running for three years or had only
been established for three years. Data collection techniques in this study were carried out using questionnaire
method. Data analysis in this study would use multiple regression with path analysis technique. This study
resulted in: only market orientation and broadscope information which had a significant and positive
relationship with entrepreneurship orientation partially.
1 INTRODUCTION
MSME growth during 2014 to 2015 reached 25.38
percent or as many as 14,623 units. The significant
growth has been able to encourage the development
of economic sectors for creating new jobs and
managed to absorb 56 796 workers with an
investment of not less than Rp 513 billion
(Anonymous, 2016). The potential of the e-commerce
industry in Indonesia is also quite significant, based
on Ernst & Young's analysis data, the growth of the
value of online business sales in the country every
year increases 40 percent. There are approximately
93.4 million internet users and 71 million users of
smartphone devices in Indonesia. It will be interesting
if it is connected with a newly established SME,
considering how the choice of market orientation in
the beginning will increasingly determine its business
performance (Risnawati and Noerijati, 2008). Two
variables showed that market orientation proved to
have a significant positive effect on company
performance. Similarly, (Setiawan, 2012) also shows
that market orientation is shown to have a significant
positive effect on business performance.
On the other hand, environmental change requires
managerial and strategic capabilities of SME players.
Environmental changes, especially the economic
environment make some SMEs forced to close down.
But some SMEs can still survive because they are
able to anticipate these changes. Environmental
analysis needed for SMEs which were able to
determine preventive measures and anticipate the
changes that occur, so that it can quickly adapt and
able to survive in any environmental conditions.
SMEs can make appropriate strategic decisions for
the survival of the company. The ability of SMEs to
dominate and control the dynamic environment will
affect the performance of the business, the researcher
is interested to see the orientation of the environment
in the newly established SMEs.
Individual characteristics are interests, attitudes
and needs brought by someone in work or business.
Individual characteristics are internal (interpersonal)
factors that move and influence individual behavior.
Human resources in organizations have a variety of
individual characteristics that differ from one
another. This difference in individual characteristics
will affect the attitude and work behavior of members
of the organization which will also affect the
performance and job satisfaction of each member of
the organization (Robins, 2009). Characteristics of
individual entrepreneurs can be seen from education,
Maretha, F. and Gunawan, S.
Market and Envinronmental Orientation, Characteristics of Entrepreneurs, Broadscope Information on Performance of SMEs In Palembang City.
DOI: 10.5220/0009152300002500
In Proceedings of the 2nd Forum in Research, Science, and Technology (FIRST 2018), pages 49-55
ISBN: 978-989-758-574-6; ISSN: 2461-0739
Copyright
c
2022 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
49
training, age, business experience, ethnic origin,
family background, and other aspects. (Nurhayati,
2011) in her research found that entrepreneurial
psychological characteristics significantly and
positively influence entrepreneurial competence and
business performance. This shows the importance of
building entrepreneurial characteristics because
entrepreneurial characteristics determine business
success.
Characteristic of SMEs is key to increase the
usage efficiency of economic competitiveness
development factors, enabling SMEs to have a more
positive mindset, establish the sensitivity of the
market and the creation of creativity and innovation
in business. The importance of characteristics
influence of individual entrepreneurs specifically on
SMEs who have just stood up to their business
performance, the researchers include research
variables. While one of the other important roles for
SMEs is the availability of information for the right
people in the right way and at the right time.
Information received by management varies greatly
in form and function.
The entrepreneurial orientation itself reflects the
extent to which companies tend to innovate, take
risks, and are proactive (Frishammar and Horte,
2007). In the context of SMEs, entrepreneurial
orientation shows a strong relationship to SME
performance (Y.Li and Liu, 2008). SMEs have the
ability to respond quickly to threats and business
opportunities (Chen and Hanbrick, 1995). This ability
is the foundation capital for SMEs to survive and
improve their performance. SMEs must understand
how new opportunities and threats arise as a result of
changes in the industrial environment and develop
appropriate strategies to respond. Companies in
different industries often respond to changes in the
industrial environment concerned because of the
ability to understand current external issues and
external factors.
2 METHODOLOGY
The population in this study were SMEs located in
Palembang which were registered with the Ministry
of Cooperatives and SMEs. The population limited to
Palembang city because the development of medium-
sized micro businesses in Palembang City contributed
to 14% of the total growth of the national micro
business. The data of the SMEs were 124 business
units (BPS, 2014). Meanwhile, the characteristics of
the sample in this study were 1. The SME has only
been running for three years or has only been
established for three years, or 2. The annual sales
result is at most Rp. 300,000,000.- (three hundred
million rupiahs).
Data collection techniques in this study were
carried out using questionnaire. Where researchers
will prepare a number of questionnaires which are
then distributed directly to the respondents in this
study. The questions were made using a Likert scale
1 - 5. The sampling technique used was purposive
sampling, namely the selection of elements to be
sampled based on certain considerations. Questions
asked to respondents regarding market orientation,
environmental orientation, characteristics of
individual entrepreneurs and broadscope information
on the performance of SMEs in Palembang through
entrepreneurship orientation as mediation for new
SMEs standing three years.
The questionnaire adapted was based on the
framework:
Table 1: Research variable indicator
Market
Orientation
customer orientation,
competitor orientation,
interfunctional coordination
Environmental
Orientation
Complexity, dynamic, and
friendliness perceived by small
and micro entrepreneurs
Characteristics of
Individual
Entre
p
reneurs
education, training, age,
business experience, ethnic
ori
g
in, famil
y
back
g
roun
d
Broadscope
Information
External information, non-
economic information, non-
financial information, future-
oriented information
Performance of
SMEs
Revenue, Sales Volume,
Marketing Area
Entrepreneurship
Orientation
innovation, independence, risk
taking, leadership and
aggressive competition
2.1 Research Framework
Source: Processed Data, 2018
Figure 1: Reseach framework
Market Orientation
Environmental
Orientation
Characteristics of
Individual
Entrepreneurs
Broadscope
Information
Entrepreneur
ship
Orientation
Performance
of SMEs
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50
2.2 Hypothesis
The hypotheses proposed in this study are:
H1: There is an influence of Market Orientation on
the Performance of SMEs
H2: There is an influence of environmental
orientation on the performance of SMEs.
H3: There is an influence of individual entrepreneurs
characteristics on the performance of SMEs.
H4: There is the influence of broadscope information
on the performance of SMEs.
H5: The influence of market orientation,
environmental orientation, characteristics of
individual entrepreneurs and broadscope
information on the performance of SMEs
through entrepreneurship orientation as
mediating variables.
2.3 Data Analysis Technique
Data analysis in this study would use path analysis
techniques with the help of SPSS version 23 software,
as for the series of tests to be carried out:
2.3.1 Descriptive Analysis
Descriptive analysis is an analysis of the
characteristics of a state of the object under study.
Descriptive statistics analyze data by selecting it in
the form of a table (tabulation). The analysis in this
study provided a detailed description of the profile of
respondents, namely: type of business, number of
workers, source of business capital, distribution, the
amount of company turnover in a month, the level of
education and experience of SME actors/owners, and
information media used by SMEs. The analysis
would be carried out using the help of statistical
application software, SPSS.
2.3.2 Path Analysis
Path Analysis was developed by Sewal Wright in
1934. Bohrnstedt defined path analysis as "a
technique for estimating the effect of a set of
independent variables that have been on a dependent
variable from a set of observed correlations, given a
set of hypothesized causal asymmetric relating
among the variables (Sunjoyo et al, 2013). Path
analysis is an extension of multiple regression that is
used to estimate causal relationships between
variables that have been predetermined, and test the
contribution or contribution of each exogenous
variable to endogenous variables (Ghozali, 2011).
The steps in carrying out path analysis in this
study are as follows: Describe path diagrams,
calculation of path coefficients, calculation of the
coefficient of determination, calculate variables
outside the variables studied, and simultaneous
testing. In testing the causal relationship which is
based on a theory that does state that the variables
studied have a causal relationship.
Path analysis is not intended to reduce causal
theory, but in its use, it must be based on a theory
which states that the relationship between these
variables is causal. Thus, the strong weakness of the
theory used in describing the causal relationship
determines in the preparation of path diagrams and
influences the results of analysis and scientific
implementation (A Widiyanto, 2013).
The structural equation of the causality
relationship is as follows:
Endogenous Variable = Exogenous Variable
+Endogenous Variable + Error
Substructure Equation I
Y1 = a + PX1 + PX2 + PX3 + PX4+ ζ1.........
(Equation 3.1)
Substructure Equation II
Y2 = a + Y1 + ζ2.............(Equation 3.2)
Description :
X1 = Market Orientation
X2 = Environmental Orientation
X3 = Characteristics of Individual Entrepreneurs
X4 = Broadscope Information
Y1 = Entrepreneurship Orientation
Y2 = Performance UKM
e1 = Correlation coefficients outside the model
e2 = Correlation coefficients outside the model
2.3.3 Coefficient of Determination (adjusted
R
2
)
The coefficient of determination is used to measure
how far the ability of the model is to explain the
variation of the dependent variable. The greater the
coefficient of determination of a model, the greater
the ability of independent variables in explaining the
variation of the dependent variable.
Market and Envinronmental Orientation, Characteristics of Entrepreneurs, Broadscope Information on Performance of SMEs In Palembang
City
51
This study used adjusted R
2
ranging from 1 - 0.
The closer to 1, the better the ability of the model to
explain the dependent variable (Ghozali, 2011).
2.3.4 Model Feasibility (F Statistical Test)
F statistical test is used to determine whether the
regression model is feasible or good to use. In this
study criteria would be used if the probability is
below 0.05, then an alternative hypothesis is accepted
which states that the regression model is feasible or
good for use in research.
2.3.5 Significance of Individual Parameters
(T Statistical Test)
T statistical test is performed to show how far the
influence of an independent variable individually in
explaining the dependent variable.
To find out whether the hypothesis is rejected or
accepted, the criteria are used if the significance
calculation value is below 0.05, so the alternative
hypothesis is accepted which states that individually
independent variables affecting the dependent
variable can be accepted (Ghozali, 2011).
3 RESULT AND DISCUSSION
3.1 Characteristic of Respondent
Details of the distribution and return of
questionnaires are presented in Table 2. Based on the
data in Table 2 the 116 questionnaires were processed
meaning that the usable response rate was still quite
high at 93.55%.
Table 2: Details of the distribution and return of
questionnaires
Description Number of
Questionnaire
Distributed Questionnaires 124
Returned Questionnaires 121
Unreturned Questinnaires 3
Uncom
p
leted Questionnaires 2
Processed Questionnaires 116
Usable Response rate (129/134
x 100%
)
93.55%
Source: Processed Research Data
The description of respondents in number and
percentage, by sex, age, length of business, number
of workers, education, and type of business, is
described in Table 3.
Table 3: Variable statistical description
Descri
p
tion Total Pe
r
centa
g
e
Gender
Female
Male
53
63
45.69
54.31
Total 116 100
Age
18-19 years old
20-21 years old
22-23 years old
24-25 years ol
11
21
35
49
9.48
18.10
30.17
42.24
Total 116 100
Length of Business
Less than 1 - 1 year
Between 2-3
y
ears
27
89
23.28
76.72
Total 116 100
Number of Workers
1-3 worker(s)
4-5 workers
64
52
55.17
44.83
Total 116 100
Education
High school
doing D3/S1
D3/S1 Graduated
S2 Graduate
d
45
26
32
13
38.79
22.41
27.59
11.21
Total 116 100
Type of Business
Craft
publishing and printing
computer services and
software
Advertising, Video and
photography
Fashion
27
24
25
11
29
23.28
20.69
21.55
9.48
25
Total 116 100
Source: Processed Primary Data
Sample respondents in this study were dominantly
male, aged between 24-25 years, business length
between 2 -3 years, with the number of workers as
many as 4-5 people, education level is high
school/equivalent, and with business group type is
from craft.
3.2 Correlation between Variables
The results of the correlation between variables in the
study are presented in Table 4.
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Table 4: Result of the correlation between variables
Description
X1 X2 X3 X4 Y1
Y
2
X1
r
1
Sig. **
X2
r
.908
**
1
Sig. ** .000
X3
r .700
**
.732
**
1
Sig.** .000 .000
X4
r .159 .210
*
.515
**
1
Sig.** .089 .024 .000
Y1
r
.837
**
.818
**
.725
**
.386
**
1 .
Sig.** .000 .000 .000 .000
Y2
r
.410
**
.378
**
.450
**
.269
**
.413
**
1
Sig.** .000 .000 .000 .003 .000
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is si
g
nificant at the 0.05 level
(
2-tailed
)
.
A good regression model should not have a
correlation between the independent variables.
Detection of the presence or absence of
multicollinearity is by analyzing the correlation
matrix of independent variables. The display of SPSS
output in table 4. shows the correlation between
independent variables below the tolerance limit of
90%.
3.2.1 Result of Substructure Model I
The Substructure I Equation is stated as follows:
Y1 = a + PX1 + PX2 + PX3 + PX4 + ζ1
Table 5 presents the ANOVA test results for the
equation of Substructure I.
Table 5: ANOVA test results for substructure I equation
Model
Sum of
Squares df
Mean
Square F Sig.
1 Regressi
on
643.165 4 160.791 96.29
6
.000
b
a. De
p
endent Variable: Entre
p
reneurial
_
orientation
b. Predictors: (Constant), Broadscope_information,
market _orientation, IW_characteristics,
Environmental_orientation
Based on table 5, the significance value of
ANOVA Test or F test produced F calculated of
96.296 with a significance level of 0.000. Because the
significance probability is much smaller than 0.005,
the regression model can be used to predict the
performance of SMEs or it can be said that market
orientation, environmental orientation, characteristics
of individual entrepreneurs and broadscope
information on entrepreneurship orientation. While
the t-test results are presented in the following Table
6.
Table 6. T-Test result of substructure I equation
Model
Unstandardized
Coefficients
Standard
ized
Coeffici
ents
t
Sig.B
Std.
Erro
r
Beta
1 (Constant) 2.532 .926 2.736 .007
X1 .568 .110 .565 5.141 .000
X2 .320 .169 .215 1.895 .061
X3 .049 .066 .060 .747 .457
X4 .243 .061 .220 3.965 .000
The results show that the market orientation and
broadscope information variables had a positive and
significant influence on entrepreneurship orientation
(sig value < 0.05). While other variables
(environmental orientation and individual
entrepreneurial characteristics) had no significant
effect on entrepreneurship orientation.
The results of the Path Analysis substructure
model 1 are presented as follows:
Figure 2: Results of the path analysis substructure model I
Based on Figure 2. can be stated as follows:
H1: There was a significant relationship between
market orientation and entrepreneurship
orientation.
The results show that the coefficient for X1 Y
is 0.565 with a prob value (0.000) where the prob
value is less than alpha 5%, there was a significant
and positive relationship between expectations of
market orientation and entrepreneurship orientation.
H2: There was a significant relationship between
environmental orientation and entrepreneurship
orientation.
ρ
x2y1
=0.215
ρ
x3y1
=0.060
r
x1x3
=0.818
r
x2x3
=0.725
ρ
x1y1
=0.220
r
x2x3
=0.386
X2
X3
Y1
X4
Market and Envinronmental Orientation, Characteristics of Entrepreneurs, Broadscope Information on Performance of SMEs In Palembang
City
53
The results for X2 Y of 0.215 with a prob.
value (0.061) where the small prob. value is large at
5% means that there was no significant and positive
relationship between environmental orientation and
entrepreneurship orientation.
H3: There was a significant relationship between
characteristics of individual entrepreneurs on
entrepreneurship orientation.
The results obtained show for X3 Y of 0.347
with a prob value (0.457) where a small prob value of
5% means that there was no significant and positive
relationship between characteristics of individual
entrepreneurs and entrepreneurship orientation.
H4: There was a significant relationship between
broadscope information and entrepreneurship
orientation.
The results obtained show that for X4 Y of
0.220 with a prob value (0.000) where the small prob
value of 5% means that there was a significant and
positive relationship between broad scope
information and entrepreneurship orientation.
3.2.2 Result Substructure Ii Model
Substructure II equation is stated as follows:
Y2 = a + Y1 + ζ2.............
Table 7: ANOVA test results of substructure equation II
Model
Sum of
Squares df
Mean
Square F Sig.
1 Regress
ion
61.898 1 61.898 23.457 .000
b
a. De
p
endent Variable: SME
p
erformance
b
. Predictors: (Constant), Entrepreneurial_orientation
Table 8: Model summary result
Model R
R
Square
Adjusted
R Square
Std. Error
of the
Estimate
Durbin
-
Watso
n
1 .413
a
.171 .163 1.62442 1.548
a. Predictors:
(
Constant
)
, Entre
p
reneurial
_
orientation
b. Dependent Variable: SME performance
Based on Table 8, the significance value of
ANOVA Test or F test produced F calculated of
23.457 with a significance level of 0.000. Because the
probability of significance is much smaller than
0.005, the regression model can be used to predict the
performance of SMEs or that entrepreneurship
orientation influenced the performance of SMEs.
The magnitude of the influence of entrepreneurial
orientation on the performance of SMEs was 0.171,
meaning that it was only 17.1 percent while the rest
(82.9%) was influenced by other factors outside the
model. While the t-test results are presented in Tabel
9.
Table 9: T-test result of substructure II equation
Model
Unstandardiz
ed
Coefficients
Standa
rdized
Coeffi
cients
t Sig.
B
Std.
Erro
r
Beta
1 (Constant) 6.671 1.063 6.275 .000
Entreprene
urial_orient
ation
.273 .056 .413 4.843 .000
The entrepreneurship orientation variable had a
positive and significant effect on the Performance of
SMEs (sig value < 0.05).
Result of Path Analysis of the substructure II
model is presented as follows:
Figure 3: Result of path analysis of the substructure II
model
H5: Entrepreneurship orientation would significantly
influence the performance of SMEs.
The results obtained show for Y Z of 0.413
with a prob. value (0.000) where the prob. value is
smaller than alpha 5%, meaning that there is a
significant and positive relationship between
entrepreneurship orientation on the performance of
SMEs. Result of path analysis which combined from
analysis of substructure 1 model and substructure 2
model is as follows:
Ρ
y1y2
=0.413
Y1
Y2
FIRST 2018 - 2nd Forum in Research, Science, and Technology (FIRST) – International Conference
54
Figure 4: Result of path analysis which is combined from
analysis of substructure I model and substructure II model
The companies that have entrepreneurship
orientation have better performance than not adopting
entrepreneurship orientation (Covin and Slevin,
1989), especially financial performance. In the
context of SMEs, entrepreneurship orientation shows
a strong relationship to the Performance of SMEs
(Y.Li et al, 2008). This is because SMEs have the
ability to respond quickly to threats and business
opportunities (Chen and Hanbrick, 1995). This
capability is the basic capital of the newly established
SME ≤ 3 years to survive and improve its
performance.
4 CONCLUSION
There was significant and positive relationship
between market orientation and entrepreneurship
orientation, there was no significant relationship
between environmental orientation and
entrepreneurship orientation, there was no significant
relationship between characteristics of individual
entrepreneurs and entrepreneurship orientation, there
was a significant and positive relationship between
broad scope information and entrepreneurship
orientation, there was a significant and positive
relationship between entrepreneurship orientation
and the performance of SMEs.
The next researchers consider including other
variables such as behavioural control and perceived
usefulness. It would be better if the number of
samples in subsequent studies is added to be more
representative so that the results can be generalized.
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ρ
x3y1
= 0.060
r
x2x3
=0.725
ρ
x1y1
= 0.220
r
x3x4
=0.386
ρ
x3y1
= 0.413
X2
X3
ρ
x1y1
=
0.565
r
x1x2
=
0.837
r
x1x3
=
0.818
Y
Y2
X1
X4
Market and Envinronmental Orientation, Characteristics of Entrepreneurs, Broadscope Information on Performance of SMEs In Palembang
City
55